Essential insights gained from dialogues with some of the most fascinating manufactures of the world During the past 12 months, CONCINNO has been able to engage with over 130 owners and CEOs of luxury goods SMEs in Germany, Austria, and Switzerland. We discussed their most important challenges and about how these business owners are able to overcome them and successfully lead their business into the future. More than forty entrepreneurs have engaged in a continuous dialogue, where we analyzed in depth issues they deem critical and developed potential solutions to those. In the upcoming months, we will summarize and share with you some of those precious insights under the tagline “Lessons Learned: Understanding SMEs in the luxury goods industry!” We will structure our findings along the following notes: Why do smaller luxury goods manufactures and suppliers follow completely different rules than their large-scale corporate counter-parts The struggle to identify your crucial competitive advantages and how to focus your business on them The lack of coherent strategies and why prioritizing critical goals is so important for small, privately-owned business The fight for brand awareness and maximizing reach to critical customer groups Finding and creatively investing in the best distribution channels or why retail is still the key to success The tremendous opportunities the internet can offer to small market players - and why most of them haven’t explored it to the fullest Why alliances and marketing associations are not a magic cure for the acquisition of new customers The high hurdles for expansion into foreign markets and how to successfully overcome them Why rising costs in administration and marketing are strangling more and more smaller businesses The skilled workers’ gap – why finding and keeping good manual work force becomes increasingly difficult Rethinking the business model – how smaller optimizations can fundamentally expand and stabilize existing businesses Growth capital and risk management: which traps to avoid How smaller companies (don’t) prepare for the next generation or an eventual sale and what are the biggest mistakes made Why do so many smaller luxury goods manufacturers frequently run intro trouble or even get to struggle for survival This is the first time

Institutions such as PwC, Bain, the BCG and others have been observing a shift in demand for luxury goods from owner-oriented to experiential consumption. The "experience" is increasingly preferred to "owning", or "being" becomes more important than "having". Suppliers of luxury- and adventure travels as well as top-class restaurants are currently benefiting particularly strongly from this change. Especially the younger luxury-affine target group (Millennials) is less and less prepared to invest into so-called "big tickets" or, in other words, to spend a lot of money on just one article. Terms such as "borrow" and "rent" (temporary ownership) but also "exchange" are gaining in importance. However, the desire to be part of the luxury society remains an important motivator. Only under changed conditions. Against this background, those suppliers will benefit most in the future, who can best bridge the gap between product and experience from the consumer's point of view. Some start-ups have already recognized the potential of the sharing economy in the luxury brand segment. Online platforms such as "Eleven James", "Rent the Runway" or "Bag, borrow or steal" primarily offer items that are characterized by a high unit price and low frequency of use. This applies in particular to designer fashion and handbags as well as wristwatches. In the future, such business models will also become more important for durable consumer goods such as real estate, yachts and cars. Because, fewer and fewer luxury customers want to bind such blocks to their legs and rather enjoy the flexibility to try something new more often. Major luxury goods manufacturers are working intensively on topics such as digitization, addressing younger target groups in the digital age and their growth through vertical integration. But have they also adjusted to the changed consumer behavior? I think not enough, although there is great potential for additional business opportunities and sustainable customer loyalty, especially in the area of ​​"sharing goods". Therefore, in the future, especially those luxury goods manufacturers will benefit, which provide their product together with a corresponding range of services and leave the customer the choice of whether they prefer to buy or borrow an item. Wolfgang Stelling is Head of Strategic

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